Country Forecast Indonesia November 2017 Updater

Country Forecast Indonesia November 2017 Updater

  • November 2017 •
  • Report ID: 358972 •
  • Format: PDF


  • The president, Joko Widodo (known as Jokowi), will serve out his full five-year term in office. He will contest the 2019 election, which he is likely to win. Nevertheless, he will face a stronger challenge from Prabowo Subianto, the leader of the opposition Great Indonesia Movement Party (Gerindra) in the House of Representatives (DPR, the legislature), who lost to Jokowi in the 2014 ballot.
  • Jokowi's administration has been successful in maintaining economic stability and reducing various structural bottlenecks. However, other serious productivity drains such as stringent labour and local-government laws, which are more politically difficult to tackle, are likely to remain unaddressed.
  • Bank Indonesia (BI, the central bank) will remain accommodative in the early part of the forecast period in order to support economic growth. Room for further monetary policy easing in 2018-19 will be limited owing to a significant narrowing of the interest-rate differential between Indonesia and developed economies, particularly the US. Consequently, The Economist Intelligence Unit expects BI to adopt a more cautious policy stance in the forthcoming years.
  • Economic growth will remain below potential owing to the slow pace of structural reforms and depressed global demand for commodities, but the government's infrastructure drive should help to keep investment relatively stable. Steady private consumption will remain a key pillar of the even growth rates. We forecast that real GDP growth will average 5% a year in 2018-22.
  • The government will continue to focus on expanding the fiscal revenue base through improved information collection, monitoring and enforcement against tax evasion. We expect the administration to make incremental progress on this front. The budget deficit will average the equivalent of 2.2% of GDP in the forecast period.
  • The current account will remain in the red owing to a large and widening primary income deficit. We expect borrowing costs to increase in line with monetary policy tightening in the US. The merchandise trade account will continue to record a surplus, but it will remain far below historical highs and too small to offset deficits on the services and primary income accounts. We expect the current-account shortfall to average the equivalent of 1.8% of GDP in 2018-22.


Loading...

We are very sorry, but an error occurred.
Please contact support@reportbuyer.com if the problem remains.